Rajeev Chandrasekhar, Minister of State for MeitY, supported the GST Council’s decision on online gaming, calling it a “well-thought-out preliminary measure.” It is to be noted that the decision is being termed as a clarification by the government to levy 28% GST on the sector on the full face value amount.
Chandrasekhar said that the Council took three years to come to this conclusion which involved much deliberation with its members.
Online gaming is an important segment, but #Wagering and games of chance have increased cases of #userharm and #MoneyLaundering. The #GSTCouncil's decision to levy taxes on #onlinegaming is a well-thought out preliminary measure.
After putting regulatory framework in place,… pic.twitter.com/rs6Is3OJuG
— Rajeev Chandrasekhar 🇮🇳 (@Rajeev_GoI) July 13, 2023
The announcement, however, has shaken the online real money gaming industry to its core. The industry, time and time again, had requested the government not to levy GST on full face value as it will lead to closing down of many entities, especially the startups. Some of these major repercussions feared are declining player count, lower FDI and job losses.
The industry’s concerns can be gauged further from what the Revenue Secretary Sanjay Malhotra has revealed. In FY23, the tax collection from the sector was around Rs 1,700 crore which is estimated to be only 2% of the total industry turnover. With the new GST implementation, it is estimated to be between Rs 15,000-20,000 crore in FY24.
The industry has claimed that the real money games are actionable claims that do not amount to gambling, but Malhotra clarified that any online game when played with an expectation of an outcome becomes taxable.
Chandrasekhar said that as soon as MeitY completes formulating regulations for online gaming, they will work with the GST Council hand in hand to bring uniformity as to which games are skill-based and which ones are harmful.
Meanwhile, the draft amendment to the GST law has been shared with all states for comment and is expected to be introduced during the monsoon session of the Parliament, starting July 20.